MacroEconomics 1-3

In one hour, Sally can write 3 term papers or bake 1 dozen chocolate chip cookies. What is Sally's opportunity cost of producing 1 term paper?

4 chocolate chip cookies

A businessperson can invest her company's profits in the stock market with a projected return of 10%. Or she can use the money along with a loan to add a new assembly line to her factory, which will yield a project return of 14% after taking into account payment of the debt. What's the opportunity cost of pursuing the stock market option instead of the factory upgrade?

4%

Which of the following statements are true about the production possibilities curve?

All of the above

Assume that there are only two countries - Country A and Country B - producing only two goods, corn cereal and designer jeans. The table here shows the production possibilities for these two countries. Which of the following statements is correct? Good 1 Good 2 Country A 80 65 Country B 150 70

Country B has an absolute advantage in both goods.

A natural disaster strikes country A, destroying bakeries across half the country. What will happen to the supply of cakes?

The supply of cakes will decrease.

An increase in household incomes across the nation leads to an increase for the demand for coffee, which would lead to:

a rightward shift in the demand curve for coffee

An improvement in technology affecting businesses in country A will most likely lead to:

an increase in the supply of goods and services in country A.

The United States can produce 20 strawberries or 80 apples, while Canada can produce 15 strawberries or 5 apples. Which of the following describes the trading possibilities for these two countries?

both countries will benefit from trading

When a point is on the production possibilities curve and there are no other points specifically on the curve, then it is:

more productive than all the other points

Assume that land can be used either for producing corn, or to produce beef by raising cattle. The opportunity cost of converting an acre from producing corn to raising cattle for beef is:

the amount by which corn production decreases

True or False? Demand for a good tends to change when you increase or decrease the price?

True

When nations specialize in the goods in which they have a comparative advantage:

both nations will experience gains from trade

The __________ of a good, the ____________that suppliers are willing and able to supply.

greater the price, larger the quantity

Outward shifts in the production possibilities curve (to the right) result in:

increased productivity

A point that is located inside the production possibility curve is:

inefficient

A Demand Schedule

is a table that lists the quantity demanded for a good that people are willing and able to buy

A Market Demand Schedule

is a table that lists the quantity demanded for a good throughout the whole economy at many different prices

Quantity Supplied

is how much of a good or service that sellers are willing and able to supply at a particular price

Which of the following statements is not true regarding the demand curve: 1. change in the price of a good is represented by movement along the curve 2. a visual representation of the demand schedule 3. it is downward sloping 4. it shows quantity demanded at different prices 5. it is upward sloping

it is upward sloping

During the time when Mary was studying for Macroeconomics, she could have instead either made brownies or played the piano. She thinks to herself that if she wasn't studying, then she would have made brownies. In this case, her opportunity cost of studying is the value of:

making brownies, which is the next best alternative she chose.

Scarcity

not having enough of a resource, good, or service to satisfy all wants at a zero price

The value or benefit given up in pursuing an alternative course of action is known as ____.

opportunity cost

According to the Law of Comparative Advantage, a good should be produced where:

opportunity costs are the lowest

Which of the following factors would not lead to a shift in the demand for bananas? 1. expectations 2. changes in demographics and preferences 3. income 4. prices of unrelated goods 5. prices of substitute goods

prices of unrelated goods

When a market price is set below the market equilibrium price, a ___________ exists, which will _______________.

shortage, create upward pressure on the price

A person or nation that has a comparative advantage in the production of a good,

should specialize in the production of that good

When a market price is set above the market equilibrium price, a _____________ exists, which will ______________.

surplus, create downward pressure on the price

Which of the following are not benefits of specialization and exchange?

taxes will be reduced

You can invest in the stock market with an expended return of 9% or invest in the bond market with an expected return of 6%. What's your opportunity cost if you invest in bonds?

3%

Carl owns a computer company. On any given day, he can produce either 500 desktop computers or 300 laptops. What's his opportunity cost if he decides to produce desktops?

300 laptop computers

Below shows the supply schedule for Bob's Low-Rider Lawn Mowing services. Which of the following statements is true regarding the supply of lawn cuts at a price of $25? $15 - 50 cuts/week $20 - 55 cuts/week $25 - 59 cuts/week 1. Bob would be willing to cut more lawns if the prices were lower 2. The supply of lawn cuts remains constant at all prices 3. Bob is willing and able to cut 59 lawns per week 4. Bob is willing and able to cut 50 lawns per week 5. Bob is willing and able to cut 39 lawns per year

Bob is willing and able to cut 59 lawns per week

Country A can either produce 10 cars or 10 computers, while country B can produce either 4 cars or 8 computers. Based on this information, which of the following statements is not true?

Country A has a comparative advantage in computers

Country A's opportunity cost of producing 1 ton of corn is 5 tons of wheat, while Country B's opportunity cost of producing 1 ton of corn is 1/3 of a ton of wheat. Which of the following statements is true?

Country B should specialize in producing corn while Country A should specialize in producing wheat

The table here shows the labor hours necessary to produce one unit of two goods (salmon and coconut creme pies) in two countries. If labor is the only input used, which of the following statements is true? Salmon Coconut Creme Pies Country C 3 labor hours 5 labor hours Country D 5 labor hours 6 labor hours

Country C has an absolute advantage in the production of both goods.

Which of the following people has the highest opportunity cost of earning a college degree, if they must give up their present job?

Curly, who is a salesman earning $60 (the most money

Problems that all economies face include which of the following: I. how to use scarce resources to satisfy unlimited wants II. how to shrink the money supply III. how to decide what goods and services to produce, how much to produce, and for whom to produce IV. how to increase opportunity costs for everyone equally

I and III how to use scarce resources to satisfy unlimited wants and how to decide what goods and services to produce, how much to produce, and for whom to produce

The production possibilities curve for two goods is bowed outward because of:

Increasing opportunity costs

Which of the following statements is not true regarding the supply curve? 1. A change in price results in movement along the curve. 2. It is a visual representation of the supply schedule. 3. It is downward-sloping. 4. It is upward-sloping 5. It is a graph illustrating the relationship between price and quantity supplied.

It is downward-sloping.

All other things equal, which of the following would shift an economy's production possibilities curve to the left?

The country experiences a major natural disaster affecting its capital goods

True or False? A nation cannot have a comparative advantage in the production of every good.

True

Which of the following may be a component of a company's capital structure?

all of the above

A shift of the demand curve to the right indicates

an increase in demand, which results in a higher equilibrium price

A shift of the supply curve to the right indicates

an increase in supply, which results in a lower equilibrium price

Points located outside the production possibility curve:

are unobtainable (not possible)

The law of demand states that:

as price increases, quantity demanded decreases and as price decrease, quantity demanded increases

The difference between capital goods and consumer goods is that:

consumer goods are purchased by consumers directly

Which of the following statements is true regarding the demand for bananas at a price of 60 cents? 60 cents - 51k tons/week 50 cents - 75k tons/week 40 cents - 89k tons/week 30 cents - 96k tons/week

consumers are willing and able to buy 51,000 tons of bananas at this price

Because resources are scarce, but wants are not:

consumers must make choices

Which of the following factors would not lead to a shift in the supply for a good or service? 1. the number of sellers in the market 2. technology 3. prices of inputs and returns from alternative activities 4. consumers' expectations 5. seller expectations

consumers' expectations

Economics is best described as the study of:

how a nation chooses to allocate its scarce resources

Economics is the study of

how people use scarce resources to satisfy unlimited wants

The production possibilities model shows us:

how we can produce two goods efficiently

Assume that you have two hours to spend at the mall. You can either visit the bookstore or enjoy a movie at the theater, which is located next door. The opportunity cost of watching a movie is:

the time you could have spent visiting the bookstore

With the same amount of resource, Country A can produce 25 tons of beef or 50 tons of corn. What is Country A's opportunity cost of producing 1 ton of corn?

1/2 ton of beef

Assuming there are only two countries, Country A can produce 10 tons of wheat or 20 tons of rice, while Country B can produce 5 tons of wheat or 15 tons of rice. What is Country B's opportunity cost of producing 1 ton of rice?

1/3 of a ton of wheat

Which of the following statements is not true regarding a supply schedule? 1. illustrates what's happening with the supply of a good or service 2. a table illustrating quantities supplied 3. shows you how much of a good or service is supplied at one price only 4. is unique and different from a demand schedule 5. includes quantities supplied at many different price levels.

It shows you how much of a good or service is supplied at one price only

If Sally can produce 1 term paper or 4 cookies in one hour, and Adam can produce 2 term papers and 1 cookie in the same amount of time, which of these statements is true:

Sally has a comparative advantage in cookies, while Adam has a comparative advantage in term papers

Quantity Demanded

is the quantity of a good or service that an individual is willing and able to buy at a certain price

The supply of a good or service:

is the relationship between the quantity of a good or service and its price

For a nation to have an absolute advantage in the production of a good means:

it can produce the good more efficiently than another nation

Which of the following statements is not true regarding the market equilibrium? 1. it is where quantity demanded equals quantity supplied 2. unless something causes a shift in supply or demand, it will not change 3. it is found at the intersection of the supply and demand curves 4. it is the only price at which quantity demanded exceeds quantity supplied

it is the only price at which quantity demanded exceeds quantity supplied

The market for coffee is currently in equilibrium. If the demand for coffee decreases, which of the following would not be true?

the demand curve would shift to the right

Which of the following is not an opportunity cost of going to college:

the final benefit of graduating from college

The perpetual problem in economics is:

the inability to satisfy everyone's wants with the resources available.

When the demand for, and supply of, a good increase simultaneously,

the new equilibrium quantity will rise, and the new equilibrium price may or may not change.

Your opportunity cost is:

the value to you of the next best (alternative) action you could have taken.

According to the two production possibility curves above, Country A should specialize in the production of: Corn Wheat Country A 5 15 Country B 2 6

wheat

Which of the following would not shift an economy's production possibility curve?

when technology remains the same

If a nation doesn't have an absolute advantage in producing anything, it:

will always have a comparative advantage in something.

It takes Joan 1 hour to make a pizza and 2 hours to make a cake, while John can make a pizza in 2 hours but can make a cake in 4 hours. Joan's opportunity cost of making a pizza is:

½ of a cake